The world's energy demand has increased rapidly in recent decades with the spread of industrialization to developing countries and gains in population. It is estimated that by 2025 the total energy demand will be at least four times the current levels. Emerging solutions to address this growth have included the development of alternative energy sources and efforts to incentive consumers to reduce or adjust their energy demand. As an example, utility companies have started to adopt demand response programs to induce consumers' to manage their energy demand in response to changes in energy supply conditions. The National Institute of Standards and Technology (“NIST”) and the Department of Energy (“DoE”) have both identified demand response as one of the priority areas for the future smart grid. In particular, demand response has the potential to reduce up to 20% of the total peak electricity demand across the country and significantly ease the adoption of renewable energy into the grid.
One of the most common demand response programs available is Coincident Peak Pricing (“CPP”), which is required for medium and large industrial consumers, including data centers, in many regions. These programs work by charging a very high price for usage during the coincident peak hour, often over 200 times higher than the base rate, where the coincident peak hour is the hour when the most electricity is requested by the utility from its wholesale electric supplier. It is common for the coincident peak charges to account for 23% or more of a customer's electric bill. From the perspective of a consumer, it is critical to control and reduce usage during the peak hour.